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प्रश्न
Distinguish between the following.
Money market and Capital market.
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उत्तर
| Money market | Capital market | |
| 1 |
Meaning A Market where short-term funds are borrowed and lend. |
A market for borrowing and lending long-term capital required by business enterprises. |
| 2 |
Term of Finance It provides short-term funds, in short-term instruments where the maturity is measured in days, weeks, or months. |
It is a market for long-term instruments which is measured in years. |
| 3 |
Instruments The instruments dealt in the market are bills of exchange, treasury bills, banker's acceptance, etc. |
The instruments dealt with in this market are bonds, debentures, equity shares and stock. |
| 4 |
Functions The money market exists as a mechanism of liquidity adjustments i.e. a link between the depositors and borrowers. |
The capital market functions as a link between investors and entrepreneurs. |
| 5 |
Risk The prices of these instruments do not fluctuate and they carry very low market risk. |
The instruments are long-term and subject to market fluctuations and so they carry very high financial and market risk. |
| 6 |
Institution The commercial banks are the important institutions in the money market. |
The stock exchange is an important institution in the Capital Market. |
